nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2023‒08‒21
twenty-two papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The Gender Gap in Earnings Losses after Job Displacement By Hannah Illing; Johannes Schmieder; Simon Trenkle
  2. Accident-Induced Absence from Work and Wage Ladders By Biro, Aniko; Bisztray, Márta; da Fonseca, João G.; Molnár, Tímea Laura
  3. The impact of parental separation on the pattern of transition to adulthood in Italy By Marcantonio Caltabiano; Silvia Meggiolaro; Valentina Tocchioni
  4. Taxation and labour supply decisions: an evaluation of the earned income tax credit in Italy By Luca Villamaina; Paolo Acciari
  5. Joining late, leaving early? Immigrant-native disparities in labor market exit By Åslund, Olof; Larsson, Fredrik; Laun, Lisa
  6. How do managers form their expectations about working from home? Survey experiments on the perception of productivity By Erdsiek, Daniel; Rost, Vincent
  7. Displacement Effects in Manufacturing and Structural Change By Ines Helm; Alice Kuegler; Uta Schoenberg
  8. Local labor markets as a taxable location factor? Evidence from a shock to foreign labor supply By Nover, Justus
  9. Homeownership rates, housing policies, and co-residence decisions By Grevenbrock, Nils; Ludwig, Alexander; Siassi, Nawid
  10. Risk and Heterogeneity in Benefits from Vocational versus General Secondary Education: Estimates for Early and Mature Career Stages in Portugal By Joop Hartog; Pedro Raposo; Hugo Reis
  11. The making of ethnic segregation in the labor market -Evidence from a field experiment. By Bursell, Moa; Bygren, Magnus
  12. The long-term integration of refugee children:Swedish experiences after the Yugoslav Wars By Åslund, Olof; Liljeberg, Linus; Roman, Sara
  13. Biased Wage Expectations and Female Labor Supply By Maximilian Blesch; Philipp Eisenhauer; Peter Haan; Boryana Ilieva; Annekatrin Schrenker; Georg Weizsäcker
  14. The Heterogeneous Earnings Impact of Job Loss Across Workers, Establishments, and Markets By Susan Athey; Lisa K. Simon; Oskar N. Skans; Johan Vikstrom; Yaroslav Yakymovych
  15. Suffering and prejudice: Do negative emotions predict immigration concerns? By Sumit S. Deole; Yue Huang
  16. Can workers still climb the social ladder as middling jobs become scarce? Evidence from two British cohorts By Cecilia García-Peñalosa; Fabien Petit; Tanguy van Ypersele
  17. Job Displacement and Migrant Labor Market Assimilation By Maria Balgova; Hannah Illing
  18. Commuting in dual-earner households: International Gender Differences with Time Use Surveys By Echeverría, Lucía; Gimenez-Nadal, J. Ignacio; Molina, José Alberto
  19. How Pandemic Shock Affects Claim for Minimum Income Measures By Andrea Barigazzi; Giovanni Gallo
  20. On Defaults, Framing, and Local Tax Policy: Quasi-Experimental Evidence from Portugal By Christian Bruns; Mariana Lopes da Fonseca
  21. Does inter-municipal cooperation increase efficiency? Evidence from Italy By Giuseppe Gori; Patrizia Lattarulo; Francesco Porcelli; Leonzio Rizzo; Riccardo Secomandi
  22. Does Performance Pay Increase the Risk of Marital Instability? By Baktash, Mehrzad B.; Heywood, John S.; Jirjahn, Uwe

  1. By: Hannah Illing (University of Bonn, IAB, IZA); Johannes Schmieder (Boston University, NBER, and IZA); Simon Trenkle (Institute of Labor Economics (IZA), IAB)
    Abstract: We compare men and women who are displaced from similar jobs by applying an event study design combined with propensity score matching and reweighting to administrative data from Germany. After a mass layoff, women’s earnings losses are about 35% higher than men’s, with the gap persisting five years after displacement. This is partly explained by women taking up more part-time employment, but even women’s full-time wage losses are almost 50% higher than men’s. Parenthood magnifies the gender gap sharply. Finally, displaced women spend less time on job search and apply for lower-paid jobs, highlighting the importance of labor supply decisions.
    Keywords: Job Displacement, Gender Wage Gap, Job Search
    JEL: J63 J16
    Date: 2023–07
  2. By: Biro, Aniko (Centre for Economic and Regional Studies); Bisztray, Márta (KRTK KTI; Centre for Economic and Regional Studies, Institute of Economics); da Fonseca, João G. (University of Montreal); Molnár, Tímea Laura (Central European University)
    Abstract: How do temporary spells of absence from work affect individuals' labor trajectory? To answer this question, we augment a 'wage ladder' model, in which individuals receive alternative take-it-or-leave-it wage offers from firms and potentially suffer accidents which may push them into temporary absence from work. In such an environment, during absence, individuals do not have the opportunity to receive alternative wage offers that they would have received had they remained present. To test our model's predictions and to quantify the importance of foregone opportunities to climb the wage ladder, we use linked employer-employee administrative data from Hungary, that is linked to rich individual-level administrative health records. We use unexpected and mild accidents with arguably no permanent labor productivity losses, as exogenous drivers of short periods of absence. Difference-in-Differences results show that, relative to counterfactual outcomes in the case no accidents, (i) even short (3-12-months long) periods of absence due to accidents decrease individuals' wages for up to two years, by around 2.5 percent; and that (ii) individuals reallocate to lower-paying employers. The share of wage loss due to missed opportunities to switch employers is between 7-20 percent over a two-year period after returning to work, whereas at most 2 percent is due to occupation switches. Our results are robust to (a) instrumenting absence with having suffered an accident, (b) exploiting the random nature of the time of the accident, and (c) within-firm matching of individuals with and without an accident and subsequent absence spell.
    Keywords: wage ladder, accidents, health shocks, temporary absence from work
    JEL: J22 J23 I10
    Date: 2023–07
  3. By: Marcantonio Caltabiano (Università degli Studi di Messina); Silvia Meggiolaro (Università degli Studi di Padova); Valentina Tocchioni (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti", Università di Firenze)
    Abstract: Many studies investigate the effects of parental separation on children, concentrating on short-term adjustment or long-term effects. Nevertheless, most of them usually consider each outcome separately, thus missing to look at the interdependencies among the different events. This paper focuses on the effects of parental separation on the events marking the transition to adulthood (from the end of education to parenthood) in a comprehensive way concentrating on a country, Italy, characterized by many peculiarities. Our aim is to verify whether young adults whose parents separated during childhood or youth show alternative pathways in comparison with those living with both parents, considering also whether the age at parental separation plays a role in differentiating these trajectories. Using data from two cross-sectional rounds of the survey ‘Families and Social Subjects’ conducted in 2009 and 2016, we applied the Sequence Analysis Multistate Model procedure. Results suggest that children of non-intact families present particular trajectories especially for the formation of their own household, where a strong cultural effect seems to be at play (e.g., favoring cohabitation). Children’s age at parental separation seems to differentiate more the pattern towards young adults’ economic independence than of formation of their own household.
    Keywords: parental separation, transition to adulthood, sequence analysis, competing-risk models, Italy
    JEL: J13 J12
    Date: 2023–07
  4. By: Luca Villamaina (Ministry of Economy and Finance); Paolo Acciari (Ministry of Economy and Finance)
    Abstract: The earned income tax credit - so-called ’monthly e80 bonus’ - introduced in Italy in 2014, has been characterized by a rapid phase-out area for budget-constraints reasons, leading to very high effective marginal tax rates. The aim of our analysis is to empirically investigate whether this policy design has effectively determined a reduction of the intensive margin of the labour supply of employees. The empirical analysis is based on the longitudinal electronic database of Personal Income Tax returns from 2011 to 2017 assembled by the Department of Finance of the Italian Ministry of Economy and Finance. The timing and the structure of the reform allow us to exploit the difference-in-discontinuities design using the before/after with the discontinuous policy change. Despite a close to 100% effective average tax rate for a substantial income range, a unique feature among EU and OECD countries, we found that the tax credit design had no negative effect on changes of the labour effort in Italy, challenging the economic theory but confirming previous empirical evidence.
    Keywords: EITC, Public Economics, Labor Market, Labor supply, Personal Income Tax
    JEL: H21 H24 H30 J22 J38
    Date: 2023–08
  5. By: Åslund, Olof (Uppsala University, Department of Economics); Larsson, Fredrik (Swedish Public Employment Agency); Laun, Lisa (Uppsala Center for Labor Studies (UCLS))
    Abstract: Theory and empirical findings on retirement determinants suggest that we may expect differences in labor market exit between native and foreign-born workers. Despite many countries seeing rising immigrant shares in their aging populations, alongside significant labor market disparities, the issue has so far received limited attention. Population-wide administrative data for Sweden show that the hazard rate to retirement is greater among immigrants already from age 50. But approaching age 65, especially marginal migrant groups have a stronger tendency to remain in the labor force and thus not adhering to the norm of retiring at a specific age. Education and family situation explain little of the retirement gaps, whereas labor market history, health, and occupational allocations are important determinants. Immigrant-native retirement differences are greater among men than among women. Overall findings suggest economic necessity and/or opportunity rather than varying preferences as drivers of differentials.
    Keywords: labor market exit; immigrants; retirement hazard
    JEL: C93 J64 J68
    Date: 2023–06–12
  6. By: Erdsiek, Daniel; Rost, Vincent
    Abstract: The recent shift towards working from home (WFH) has far-reaching implications for social and economic outcomes. While firms are gatekeepers for the ongoing diffusion of flexible work arrangements, there is little evidence on how firms decide to offer WFH. We leverage two survey experiments among nearly 800 knowledge-intensive services firms in Germany to analyse whether managers' beliefs about the productivity effects of WFH affect their adoption decisions. Exploiting exogenous variation in managers' information set, we find that managers update their beliefs about the productivity effects of WFH when they receive information on workers' self-assessed WFH productivity. In addition, the information treatment significantly increases managers' willingness to adopt or intensify WFH policies. Combining our main survey experiment with two follow-up surveys, we find persistent information treatment effects on both managers' beliefs about WFH productivity and firms' expected WFH intensity after the Covid-19 pandemic. A complementary survey experiment confirms our results pointing to a causal relationship between managers' beliefs about WFH productivity and the adoption of WFH practices. These findings have implications for potential policy measures targeting firms' WFH adoption.
    Keywords: working from home, survey experiment, information provision, firm-level, managers, expectations
    JEL: D22 D23 L22 O33 M54
    Date: 2023
  7. By: Ines Helm (University of Munich); Alice Kuegler (Central European University); Uta Schoenberg (University College London)
    Abstract: We investigate the consequences of structural change for workers displaced from the manufacturing sector. Manufacturing establishments traditionally employed low- and high-wage workers in similar proportions and paid substantial wage premiums to both types of workers. Structural change has led to the disappearance of these jobs, particularly for low-wage workers. Decomposing displacement wage losses, we show that low-wage workers suffer considerable losses in establishment premiums following displacement, whereas high-wage workers tend to fall down the match quality ladder. With ongoing structural change, losses in wages and establishment premiums have increased over time, especially for low-wage workers, in part because they are increasingly forced to switch to low knowledge service jobs where establishment premiums are low. Our findings further highlight that structural change and layoffs in manufacturing have significantly contributed to job polarization and the rise in assortative matching of workers to firms.
    Keywords: : structural change, manufacturing decline, displaced workers, cost of job loss, human capital, firm rents
    JEL: J22 J24 J31 J63
    Date: 2023–07
  8. By: Nover, Justus
    Abstract: This paper examines how municipal taxes respond to the local impact of a labor market shock. The analysis exploits a commuting policy that liberalized cross-border labor markets between Switzerland and the EU. The reform was implemented at a time of skilled labor shortages and led to a substantial inflow of cross-border workers into Swiss border municipalities. Identification rests on exogenous regional variation in treatment intensities based on commuting times. The results show that corporate tax changes are significantly larger than zero in highly-treated border municipalities after the reform and when compared to less-affected regions. This is consistent with the theory according to which governments can tax rents that arise from productive location factors - an interpretation supported by several model extensions and robustness tests. The results on personal income taxation indicate a similar yet smaller and lagged response.
    Keywords: productive amenities, agglomeration, cross-border commuting, skill shortage, tax competition, Swiss-EU agreement
    JEL: H71 R23
    Date: 2023
  9. By: Grevenbrock, Nils; Ludwig, Alexander; Siassi, Nawid
    Abstract: Homeownership rates differ widely across European countries. We document that part of this variation is driven by differences in the fraction of adults co-residing with their parents. Comparing Germany and Italy, we show that in contrast to homeownership rates per household, homeownership rates per individual are very similar during the first part of the life cycle. To understand these patterns, we build an overlapping-generations model where individuals face uninsurable income risk and make consumption-saving and housing tenure decisions. We embed an explicit intergenerational link between children and parents to capture the three-way trade-off between owning, renting, and co-residing. Calibrating the model to Germany we explore the role of income profiles, housing policies, and the taste for independence and show that a combination of these factors goes a long way in explaining the differential life-cycle patterns of living arrangements between the two countries.
    Keywords: Homeownership, Co-residence, Overlapping generations
    JEL: D15 E21 H31 R21
    Date: 2023
  10. By: Joop Hartog; Pedro Raposo; Hugo Reis
    Abstract: We estimate a dynamic model of individual labour market careers (turnover and search, wage development) on Portuguese panel data of graduates from vocational and general secondary education. We find that vocational graduates benefit more from the internal labour market than from the external market. This holds even more for mature than for young individuals. This hurts as among the mature, vocational has higher lay-off probability. To the common result that vocational education trades early employment advantage for later disadvantage we add a decomposition of employment status in its dynamic components. To the literature on wage effects we add a breakdown of variances in heterogeneity and risk.
    Keywords: risk, vocational education, search models
    JEL: J30 J64 D80 I26
    Date: 2023
  11. By: Bursell, Moa (Institute for Futures Studies, Iffs); Bygren, Magnus (Institute for Futures Studies and Department of Sociology, Stockholm University)
    Abstract: Western labor markets are typically segregated by country of birth, with immigrants often working in immigrant-typed jobs, e.g., cleaners, taxi drivers, fast-food chefs, and similar. The aim of this paper is to investigate whether employer variation in discriminatory hiring choices contributes to the maintenance of such immigrant niches by channeling immigrants and their descendants into these types of jobs. We use correspondence audit data derived from 7, 051 job applications sent to job openings in 15 different occupations in the Swedish labor market between 2013 and 2019, in which names signaling the ‘foreignness’ of job applicants were randomly assigned to job applications with otherwise identical qualifications. Our results suggest that employers do contribute to this type of segregation. While ethnic discrimination is pervasive in the ‘native’ occupations in our data, it declines as the share of foreign-born individuals working in a given occupation increases, and is low or even absent in the most immigrant-dense niches. However, the pattern is gendered: it is only ‘foreign’-named men who are disproportionately channeled into such niches. We conclude that variation in discriminatory employer hiring choices appears to be partly responsible for reproducing (male-dominated) immigrant niches in the labor market.
    Keywords: discrimination; ethnicity; segregation; correspondence audit; field experiments; labor market; hiring
    JEL: J71
    Date: 2023–05–17
  12. By: Åslund, Olof (Uppsala University, Department of Economics); Liljeberg, Linus (IFAU - Institute for Evaluation of Labour Market and Education Policy); Roman, Sara (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: We study the economic and social integration of refugee children. The analysis follows war refugees arriving from former Yugoslavia to Sweden in the early 1990s for up to 25 years. We find strong educational and economic integration, although differing by age at migration and gender. By contrast, segregation is striking in family formation. Those under 7 at migration had grades and high school completion on par with natives. Poor initial school performance among teenage refugees was partly compensated by education at higher ages. By 2019 there was on average full labor market assimilation among women while a small gap remained among men. However, refugees arriving before school start outperformed their native peers. Endogamy was common; even among preschoolers, 60–70 percent had their first child with a partner of Yugoslavian descent. Many of the partners migrated after the refugee had turned 20. Intermarriage is gendered and related to socioeconomic status. Residential and workplace segregation decreased over time but remained pronounced among people without tertiary education.
    Keywords: Refugee children; migrants; economic and social integration
    JEL: F22 J15 J18
    Date: 2023–06–27
  13. By: Maximilian Blesch (HU Berlin and DIW Berlin); Philipp Eisenhauer (Amazon); Peter Haan (FU Berlin and DIW Berlin); Boryana Ilieva (HU Berlin and DIW Berlin); Annekatrin Schrenker (FU Berlin and DIW Berlin); Georg Weizsäcker (HU Berlin)
    Abstract: Wage growth occurs almost exclusively in full-time work, whereas it is close to zero in part-time work. German women, when asked to predict their own potential wage outcomes, show severely biased expectations with strong over-optimism about the returns to part-time experience. We estimate a structural life-cycle model to quantify how beliefs influence labor supply, earnings and welfare over the life cycle. The bias increases part-time employment strongly, induces flatter long-run wage profiles, and substantially influences the employment effects of a widely discussed policy reform, the introduction of joint taxation. The most significant impact of the bias appears for college-educated women.
    Keywords: returns to experience; biased beliefs; part-time work; dynamic life-cycle models; ;
    JEL: D63 H23 I24 I38 J22 J31
    Date: 2023–07–27
  14. By: Susan Athey; Lisa K. Simon; Oskar N. Skans; Johan Vikstrom; Yaroslav Yakymovych
    Abstract: Using generalized random forests and rich Swedish administrative data, we show that the earnings effects of job displacement due to establishment closures are extremely heterogeneous across workers, establishments, and markets. The decile of workers with the largest predicted effects lose 50 percent of annual earnings the year after displacement and accumulated losses amount to 250 percent during a decade. In contrast, workers in the least affected decile experience only marginal losses of less than 6 percent in the year after displacement. Workers in the most affected decile tend to be lower paid workers on negative earnings trajectories. This implies that the economic value of (lost) jobs is greatest for workers with low earnings. The reason is that many of these workers fail to find new employment after displacement. Overall, the effects are heterogeneous both within and across establishments and combinations of important individual characteristics such as age and schooling. Adverse market conditions matter the most for already vulnerable workers. The most effective way to target workers with large effects, without using a complex model, is by focusing on older workers in routine-task intensive jobs
    Date: 2023–07
  15. By: Sumit S. Deole (Trier University, GLO Fellow); Yue Huang (Institute for Labour Law and Industrial Relations in the EU, Trier University, GLO Fellow)
    Abstract: This paper examines the role of individuals’ emotions in determining their concerns about international migration. For the empirical analysis, we exploit the previously less explored information in the German Socio-Economic Panel (SOEP) data on individuals’ negative emotions, e.g., anger, fear, and sadness. We find that the increased frequency of experiencing negative emotions is positively associated with immigration concerns. Moreover, we show that the relationship varies across employment status, birth cohort, and social media usage. Our analysis also underscores the real-life consequence of emotions by demonstrating their positive association with male support for far-right political parties but not among females. Finally, we exploit the exogenous variation in negative emotions induced by individuals’ parent’s death to infer causality. Fixed effects regressions with instrumental variables exhibit a positive impact of negative emotions on immigration concerns only among females, but no significant effects are found among males. We discuss the results for their robustness and limitations.
    Keywords: Negative emotions, immigration concerns, bereavement
    JEL: D91 F22 P16
  16. By: Cecilia García-Peñalosa (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, Centre de recherche de la Banque de France - Banque de France); Fabien Petit (University of Sussex); Tanguy van Ypersele (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The increase in employment polarization observed in several high-income economies has coincided with a reduction in inter-generational mobility. This paper argues that the disappearance of middling jobs can drive changes in mobility, notably by removing a stepping stone towards high-paying occupations for those from less well-off family backgrounds. Using data from two British cohorts who entered the labour market at two points in time with very different degrees of employment polarization, we examine how parental income affects both entry occupations and occupational upgrading over careers. We find that transitions across occupations are key to mobility and that the impact of parental income has grown over time. At regional level, using a shiftshare IV-strategy, we show that the impact of parental income has increased the most in regions experiencing the greatest increase in polarisation. This indicates that the disappearance of middling jobs played a role in the observed decline in mobility.
    Keywords: Inter-generational mobility, Job polarization, Parental income, Occupational transition, British cohort
    Date: 2023–10
  17. By: Maria Balgova (IZA); Hannah Illing (University of Bonn, IAB, IZA)
    Abstract: This paper sheds new light on the barriers to migrants’ labor market assimilation. Using administrative data for Germany from 1997-2016, we estimate dynamic difference-in-differences regressions to investigate the relative trajectory of earnings, wages, and employment following mass layoff separately for migrants and natives. We show that job displacement affects the two groups differently even when we systematically control for pre-layoff differences in their characteristics: migrants have on average higher earnings losses, and they find it much more difficult to find employment. However, those who do find a new job experience faster wage growth compared to displaced natives. We examine several potential mechanisms and find that these gaps are driven by labor market conditions, such as local migrant networks and labor market tightness, rather than migrants’ behavior.
    Keywords: Immigration, Job Displacement, Job Search
    JEL: J62 J63 J64
    Date: 2023–07
  18. By: Echeverría, Lucía; Gimenez-Nadal, J. Ignacio; Molina, José Alberto
    Abstract: Prior literature analyzing gender differences in commuting has reported that men commute longer distance/time than do women, and one explanation for this gender gap is based on household responsibilities falling on women. But most of the literature examining gender differences in commuting has not considered the interdependence that exists between the members of couples. We analyze gender differences in commuting time for a sample of dual-earner couples living in Spain, Italy, South Korea, and the United Kingdom, taking into account the inter-relatedness of decisions within couples. We estimate Ordinary Least Squares equations for men and women on commuting time and mode of transport (private, public, and active transport) including own characteristics as well as spouse attributes and commuting choices. Results indicate that the number of children is significantly related to shorter commuting times for female workers in all countries, with no associations found for their male counterparts. In addition, having children is associated with changes in the commuting mode choice of women in Italy, Korea and the UK, but no associations are found for men. Our evidence indicates that, while the presence of children is related to commuting behavior of women, it is not the case for men. Furthermore, we find that couples' decisions on commuting are complementary, which may shed light on their relationship that should be addressed by theoretical models.
    Keywords: commuting, gender differences, dual-earner couples, intra-spousal effects, household responsibilities, Multinational Time Use Study
    JEL: R40 J22 O57 D19
    Date: 2023
  19. By: Andrea Barigazzi; Giovanni Gallo
    Abstract: Social transfers, and minimum income schemesin particular, are key toolsto support people’sincome and protect their living standards, especially in times of crisis. This paper aims to understand how the claiming of social benefits changed in response to the biggest crisis of recent years, i.e. the pandemic shock. In particular, we test whether the pandemic has reduced the transaction costs associated with claiming social transfers, increasing their spread across the population even controlling for recent recessive trends. We focus on Italy as an interesting case study, because it was the first Western country to be strongly affected by the Covid-19 pandemic and the latest EU country introducing a national minimum income scheme (the Reddito di Cittadinanza or RDC). Based on a rich dataset of statistics at NUTS-3 regional level, results show a significant and positive correlation between the spread of RDC recipients and the one of Covid-19 contagions, especially during the first stage of pandemic. This evidence confirms that lockdown measures strongly affected the economic wellbeing of households and, in turn, transaction costs associated with the RDC claim. Main results hold when relevant demographic and socioeconomic variables directly influencing the RDC claim are considered.
    Keywords: Minimum income schemes; transaction costs; Covid-19; social transfers; NUTS-3 regions
    JEL: I18 I31 I38
    Date: 2023–07
  20. By: Christian Bruns; Mariana Lopes da Fonseca
    Abstract: We find that policy decisions made by elected politicians in Portuguese municipalities violate the predictions of standard microeconomic theory. Municipalities can choose a withholding rate between zero and five percent of the income tax revenue collected within their boundaries by the national tax authority. A reform altered the withholding rate applicable if a municipality fails to communicate its chosen rate to the national tax authority, reducing it from five to zero percent. According to standard microeconomic theory, this reform leaves a municipality’s decision problem unchanged. In municipalities with strong electoral competition, however, right-leaning mayors choose significantly lower rates than their left-leaning counterparts after the reform. Adopting a behavioral perspective, we argue that the reform influenced perceptions and resulted in increased electoral accountability, especially in municipalities with intense electoral competition. Politicians in these municipalities responded by adjusting withholding rates to better align with their constituents’ (ideological) preferences.
    Keywords: perception, income taxation, local taxation, ideology, accountability
    JEL: D72 D91 H71
    Date: 2023
  21. By: Giuseppe Gori (Istituto Regionale di Programmazione Economica della Toscana - IRPET); Patrizia Lattarulo (Istituto Regionale di Programmazione Economica della Toscana - IRPET); Francesco Porcelli (Università degli Studi di Bari-Aldo Moro); Leonzio Rizzo (Università degli Studi di Ferrara & IEB); Riccardo Secomandi (Università degli Studi di Ferrara)
    Abstract: Evidence on the impact of municipal amalgamation and cooperation is mixed and most of the existing literature is focused on the effect on the cost per capita, which, however, is not sufficient to test for a potential increase in efficiency. Therefore, the evaluation of the impact on the physical output of municipal services is needed. This is why we use a panel dataset with all Italian municipalities, covering four years, with details on expenditure and output related to six different local services provided by municipalities. The first novelty of our work is including the local service dimension in the analysis. This dimension is extremely important to properly evaluate the impact of inter-municipal cooperation, which, differently from amalgamation, usually covers only some specific services. In our analysis, we exploit the fact that municipalities choose to enter a municipal association at different years. Therefore, we evaluate the impact of intermunicipal cooperation on per-capita expenditure and output by using the within variation in each municipality and municipal service. The second novelty is the use of specific indexes of direct output for the provided services. We find that inter-municipal cooperation decreases per capita expenditure leaving output unchanged, thus generating an increase in efficiency. Interestingly, when we concentrate the analysis on small municipalities with less than 3, 000 inhabitants, inter- municipal cooperation leads also to increase in output. We conclude that inter-municipal cooperation is extremely relevant in sorting out financial constraints of small municipalities when they need to provide services with high fixed costs. This result is particularly important in Italy where 56% of municipalities has less than 3, 000 inhabitants. The effect is more pronounced as the number of associated municipalities increases and when there is at least one big municipality in the association.
    JEL: H72 H73 C23
    Date: 2023–07
  22. By: Baktash, Mehrzad B.; Heywood, John S.; Jirjahn, Uwe
    Abstract: This paper uses German survey data on married couples to examine the association of performance pay at work and subsequent separation or divorce. Despite extensive controls, performance pay remains associated with an increased probability of separation or divorce. Yet, the results are entirely gender specific. When husbands earn performance pay, no association with marital instability is found. When wives earn performance pay, the association is large and robust. This pattern persists across a variety of modeling choices and attempts to account for endogeneity. We argue that the pattern fits theoretical expectations and discuss the implications.
    Keywords: Performance Pay, Separation, Divorce, Gender
    JEL: J33 I31 J32
    Date: 2023

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